Nigeria grants 9 private firms off-grid power generation licences

In a move signaling growth and expansion in Nigeria's energy sector, the Nigerian Electricity Regulatory Commission (NEC) has granted nine new off-grid generation licenses to private firms in the first quarter of 2024. This development marks a significant step towards diversifying and decentralizing the country's power generation landscape. Oti Ikomi, the Chief Executive Officer of Proton Energy, discussed the implications of these new licenses in an exclusive interview with CNBC Africa. Mr. Ikomi highlighted the positive impact of these licenses on private sector players, including major companies like MTN and Golden Penny Group. These firms are now able to generate their own electricity, moving away from traditional centralized power systems. The shift towards off-grid and captive power generation is seen as a strategic move to improve efficiency, sustainability, and cost-effectiveness in the energy sector. One key point raised by Mr. Ikomi is the growing importance of off-grid power solutions in Nigeria. While the country has an estimated 5,000 megawatts of on-grid capacity, the off-grid sector is believed to have nearly three times that capacity, with approximately 15,000 megawatts. This underscores the significant role of private generators in homes, offices, and industries in providing power outside the main grid. Furthermore, Mr. Ikomi discussed the transition towards cost-reflective tariffs in the power industry, driven by the introduction of band A tariffs. As companies like MTN and Golden Penny Group opt for alternative energy sources such as gas-fired generators or renewables, the focus is shifting towards more sustainable and environmentally friendly power generation methods. Another key theme addressed in the interview is the expanding use of gas-to-power capacity and the integration of solar energy into the energy mix. Mr. Ikomi emphasized the importance of promoting bilateral trading between generating and distribution companies to drive market efficiency. While there are challenges in the distribution sector, initiatives like bilateral contracts and encouraging investment in advanced risk-mitigated generating companies are seen as crucial steps towards addressing power sector challenges. Addressing the metering gap in Nigeria, Mr. Ikomi emphasized the need for increased metering to enhance customer satisfaction and willingness to pay. With over 12 million electricity customers in the country, of which only about 5 million are metered, the push for affordable and sustainable metering solutions is essential. Initiatives supported by the World Bank to improve metering infrastructure and promote a willing buyer, willing seller model are expected to boost transparency and efficiency in the sector. In conclusion, the granting of off-grid generation licenses to private firms in Nigeria represents a positive shift towards a more diversified and sustainable energy landscape. As the country navigates challenges in the power sector, initiatives promoting off-grid solutions, cost-reflective tariffs, and improved metering infrastructure are crucial for driving growth, efficiency, and reliability in the energy industry.